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Retirement Planning > Retirement Investing

Ireland, Spain Feel Pain of Austerity

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A poll of Ireland’s citizens indicates deep division over the rescue package the country has accepted from the European Union (EU) and International Monetary Fund (IMF). In a survey published Saturday, when asked if they supported the bailout, 51% said they do, but 56% said that the country had surrendered its sovereignty in accepting it. According to a Reuters report, 68% believe that the budget passed on Wednesday is unfair, laden as it is with austerity measures.

Those responding to the poll indicated a belief that the Fine Gael party would form a coalition with the Labor party in an ouster of Fianna Fail, the ruling party that negotiated the bailout and devised the budget. Fine Gael has called for renegotiation of the bailout terms. That may not be possible, particularly since on Friday Moody’s slashed the nation’s credit rating by five notches, leaving it hovering near junk status.

The Irish aren’t the only ones feeling the pain of belt tightening. In Spain, unions marched Saturday against that country’s austerity measures, and threatened another general strike if plans to raise the retirement age were not abandoned. The government, as part of its austerity plan to avoid having to seek a bailout as Ireland did, intends to raise the retirement age from 65 to 67, a deeply unpopular idea.

Ignacio Fernandez Toxo, the leader of Spain's largest union, CCOO, said, “Sixty-seven marks the boundary for an agreement or not … [if the plan goes ahead] there will be a general strike and it will be in January.” Spaniards have not been happy with Madrid’s efforts to fix the nation’s economy; on Dec. 3 its air traffic controllers called a wildcat strike that led to a state of emergency as the nation sought to avoid a repeat of the turmoil that ensued.

Spain is the fourth largest economy in the euro zone and is teetering on the edge of its own rescue; just last Wednesday Moody’sput the country on review for a possible downgrade in its credit rating, citing concerns over its debt levels at banks and regional governments. Spain’s bond spreads crept higher at an auction on Thursday.


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